In his tenure since joining the XM
Satellite Radio family, Jon Zellner has proven to be not only a
quick study, but he continues to evolve and develop his
understanding of the “big picture.” With a firm grasp on the daily
programming tasks in front of him, and an army of stellar music
channels, Zellner opens up about XM’s place in exposing new music,
his competitive situation and the changes he’s seen in the satellite
industry since joining XM.

You've been on the job at XM for two and a
half years now. What are the biggest changes in your job today
versus when you first arrived at XM?
The job is the same but, my understanding of the business has grown
dramatically. There is a huge learning curve here and it all comes
back to the fact that every decision an FM radio station Program
Director makes is because of Arbitron, while every
programming decision we make at XM truly is focused on content and
listener satisfaction. I believe that the "re-thinking" process
takes at least a year. So many things have been burned in our brains
about how to win the programming game...many are valid, but everyone
in radio should constantly be asking themselves whether they do
certain things because it's the right way or because it's the way
it's always been done. The choices for audio entertainment in 2007
are staggering...radio (terrestrial and satellite) needs to maintain
relevance to survive. The good news for us is that not one XM
channel has to worry about the next trend or what promotion will
cause a ratings spike. We can focus all of our attention on the
product - the music and the magic between the songs. The one part of
my job that has changed is the amount of traveling I've been doing
recently, working with many of our business partners at the OEM and
after market level.

How do you see the record industry's
perception of satellite radio's role in the exposure and breaking of
new artists?Most labels finally realize that we have the ability to help
break new music and artists, sell records and create full blown
marketing strategies for new releases and tours. Plus, many artists,
labels and managers also realize the reach XM has. Some of our
channels are cuming over three million people, far more than any FM
radio station in America. Our latest research shows XM 20 on 20 with
a cume of 2.6 million, just ahead of Z100. And, that figure
does not include the tens of million listeners we have via
DirecTV, AOL, three major airlines, rental cars and two
major cell phone companies. It's interesting when a label calls
about a new release from a heritage artist and they have nowhere to
work the project at radio. XM is committed to breaking new music.
Billy Zero and Tobi on XMU (XM 43) listen to
hundreds of unsigned bands every week. Mike Marrone on the
Loft and Bill Evans on XM Cafe are months ahead of
any FM AAA station. Steve Kingston on Ethel often
plays several cuts off a new modern rock release, not just the
single released to radio. Aside from airplay, we also offer
effective marketing campaigns at retail. Our partners, Best Buy,
Circuit City, Target and Wal-Mart are always
looking for opportunities to work with programming. And, we have
also done releases at Starbucks on the Hear Music
label which include performances and DVDs of performances recorded
at XM's performance theater. Recently, we started working with
promoters on concert tours. Last fall when KZLA/Los Angeles
changed formats to Movin', XM's Highway 16 presented
the KZLA Country Bash and sold it out by doing an on-air
blitz and a promotion at Best Buy. Last month, we sold out the
Martina McBride concert at Radio City Music Hall. Some
labels are still coming around, but I think we've made excellent
progress over the past couple years.

Are the labels as promotionally proactive
with you as they were when you were in terrestrial radio (less or
more)? Why do you think that's the case?
The XM music channels don't do many promotions. There are some that
make sense, like sending listeners to the Grammy's (we have a
partnership with NARAS and create a Grammy channel every
year), the BET Awards (we just broadcasted the show live on
XM 67 The City), the MTV New Year's Eve Bash (20 on
20 was onsite). We also bring people to DC to watch our
Artist Confidentials and other long form shows. Plus, we
broadcast live from Live Earth, Bonnaroo, South By
Southwest, Lollapollooza, Farm Aid, Virginfest,
CMA Music Fest, the Montreal Jazz Festival and dozens
more. Sometimes, we send winners to these events; other times we
simply allow our listeners to hear it live. What we DON'T do on the
air is giveaways you hear on small market FM stations like CDs and
movie passes. We try to keep the channels clutter-free in addition
to being commercial-free.

How can you measure satellite radio as a
potent force in the breaking of new music and artists?There are many examples of modern rock records selling in New
York, country records selling in New York, LA or San Francisco and
heritage rock artists selling everywhere with no radio airplay. Last
fall, Bob Dylan had his best selling first week in his
forty-plus year career. Aside from his weekly show, XM created a
micro-channel showcasing the new release which had Bob walking
listeners through it track by track. With regard to unsigned and
recently signed musicians, we offer several channels that are
focused completely on new and emerging artists including the
RADAR Report, a weekly show on XMU. Plus, we do live
broadcasts from the Knitting Factory and The Living Room
in New York. And, last year, we encouraged unsigned bands to send us
their demo for a chance to open for Bon Jovi at Giants
Stadium and a recording contract with AEG Music.

What do you see as the biggest changes in
the satellite industry since you first started at XM?The biggest change has been the shift from the retail
aftermarket sales to new car sales. XM's factory installed and
factory activated radios are now available in hundreds of models
from GM, Toyota, Honda, Hyundai,
Lexus, Infiniti, Saturn and more and over half of
all new cars that come with a ninety day free trial period end up
converting into paying subscribers. That means more than half of
America doesn't even know that they're disenfranchised with local
radio until they sample XM and can't go back.
We also spend less time these days talking about
products and technology as our focus has moved toward marketing our
unmatched and exclusive content. We understand that the radios are
merely one means to experience this content. Because of this, we
have moved toward making XM available over other pipes besides our
own. We reach over fifteen million people through DirecTV, over
twenty million people through AOL, over ten million travelers on
United, Jet Blue and Air Tran and over three
million people through AT&T/Cingular and All-Tel cell
phones. While people don't necessarily relate to buying radios the
way they once did, they certainly are buying cell phones, TVs and
automobiles. Our audience and reach will continue to climb as we
utilize different paths to make our content available.

What are the pros and cons of a merger from
the programming perspective?From a programming perspective, I can't think of any cons. The
pros are obvious...satellite radio subscribers will get more
choices, including the best of both services’ music, sports, news
and talk offerings.

It's getting increasingly more difficult for top shelf
air personalizes to exercise their full creative talents in
terrestrial radio because of FCC sanctions. Should indecency rules
and policies apply to subscriber based programming as well (or to
what extent)? We don’t believe any regulation is necessary. We do
believe that parents should be able to control the content that is
coming into their car or into their home. We currently are able to
block out certain channels and they are clearly labeled as “XL,”
which stands for extreme language. Either the consumers can do it on
their own devices or we can do it from our end to make sure that
subscribers do not receive any channel that somebody doesn’t want or
feels is inappropriate for their family.

Who is your biggest competitor and what is your philosophy on
counter-programming against them?
XM’s biggest competitor is any other entity providing audio
entertainment and there are new ones popping up all the time. The
challenge is determining which ones have the business model and
distribution structure to make them a long lasting entity and which
ones will be gone before they get up and running. Regarding
competition, my theory is that we need to be as knowledgeable and
aware as possible of what everyone else is doing, but not to let it
get in the way of creativity, originality and pure common sense. I
think research is an excellent tool, but too many radio companies
and PDs let it dictate new directions rather than confirm or deny
existing suspicions that are already apparent and sometimes obvious.
The “blind leading the blind” is all too common in business today
where someone makes a decision because flawed research told them to
do it and then their competitor follows instead of listening to
their gut. Radio (satellite and terrestrial) needs to look at the
big picture and constantly re-invent itself to stay relevant with
the next generation of music fans. Young people today are far less
enamored with radio than we were. PDs should challenge themselves to
find the time to do their own focus groups and brainstorming
sessions, and try new initiatives that offer something unique and
compelling to audiences looking for and expecting more. That will be
the difference between your product having “fans,” as opposed to
“listeners.”